**2. Research methodology and applied methods**

shared by members of a group, which defines the group's view of itself and its environment as well as its way of performing daily activities [1]. It should be emphasized that in terms of organizational culture, group can stand for a nation, an industry segment, a company or any other relatively stable social construct. However, there are authors pointing to differences between organizational culture and national culture. Although there is a consensus that culture is always about sharing collective values and behavior by members of the group, national cultures differ mainly on the level of fundamental values, while organizational cultures alter more on the level of perfunctory practices and can be more manageable. As such, organiza-

At present, there is a growing interest in studying the relationship between the organizational culture and the company performance resulting from its competitiveness [5]. It seems that with the world economic globalization aggravating, organizational culture as a soft power has become a weapon used to seize the opportunity to meet the challenges and achieve sus-

As in culture, the competitiveness is also being analyzed at different levels. Evaluated from the company level competitiveness, over sectoral to national and global competitiveness [7, 8], those levels in fact correlate with the abovementioned levels of culture. Since competitiveness is considered a key determinant for growth and new jobs creation, it is a concept that has been intensively discussed. World Economic Forum assesses the competitiveness of 140 economies in its Global Competitiveness Report [9], providing insight into the drivers of their productivity and prosperity. Those drivers are organized in 12 relatively independent pillars, but since all those pillars are very people-driven, it can be easily assumed that they are closely related

In the light of the abovementioned facts, the purpose of this study is to learn the relationship between the culture and competitiveness as well as the competitiveness implications of the current and preferred culture profile characteristic of the Croatian construction industry.

• to determine which organizational culture types are currently dominant in Croatian con-

• to identify preferred organizational culture types by both engineers and engineers-to-be, in

• to investigate if there are any culture dimensions that are statistically significantly associ-

There are several reasons making these goals worth studying. First of all, previous research [10] indicates that there is a significant correlation between a construction company's organizational culture and the company performance, but at the same time it implies the knowledge gap and the need for further analysis in order to present that correlation in more detail.

Furthermore, being a labor-intensive business, construction industry is especially sensitive to basic assumptions shared by project team members or any other critical group. That is why Wilco Tijhuis, joint-coordinator at working-commission W112 "Culture in Construction,"

In order to fulfill so defined purpose, several research objectives have been set:

order to suggest the direction of the recommended organizational change

tional culture is determined by the national culture [2–4].

tainable competitiveness [6].

86 Organizational Culture

to national and organizational culture.

struction industry and their subcategories

ated with competitiveness and to what extend

The research presented in this chapter was in fact an extensive case study, conducted in several phases over the last 3 years. It was designed in a way to reflect all relevant aspects of the subject and purpose of this study. As a result, different scientific methods were applied.

The first phase was intended for the secondary data analysis. During that phase, scientific methods of analysis and synthesis of the relevant literature were used, followed by descriptive method and classifications of identified key issues, as well as compilation method with the aim of setting the more specific goals for the empirical part of the research. Findings from this research phase were used mostly in the introductory part of this chapter as well as for the interpretation of the later empirical results.

After secondary data analysis had pointed out the aspects whose research would give an additional value to the study through building the extant knowledge, the first empirical phase of the study was conducted. It was the analysis of organizational culture of the Croatian construction industry. There is a variety of measure instruments used to assess the organizational culture, out of which the Competing Values Framework and Organizational Culture Assessment Instrument (OCAI) have been adopted as methods for this study, because OCAI was verified as reliable in measuring organizational culture in construction sector [16].

As a measurement tool, OCAI is based on the Competing Values Framework, which was developed during the 1980s [17, 18] for assessing and profiling the dominant cultures of organizations. As shown in **Figure 1**, this framework is consisted of two dimensions: the first dimension measures organizational focus from internal to external and the second dimension differentiates a focus on flexibility, discretion and dynamism from focus on stability, order and control.

Such a dispersion of basic values results in four quadrants, each representing a distinct type of organizational culture: the clan, the hierarchy, the adhocracy and the market. Basic characteristics of specific culture types are also visible in **Figure 1**. Although different, it is important to emphasize that none of these types is dominant over the others, only some types can be more appropriate in a certain context [19]. However, recent research [20] shows that whichever culture type might be dominant, it exerts a positive influence on both internal (innovation competence and human relations) and external (profitability, growth and reputational assets) performance only if it is balanced, that is if there are no significant deviations of individual culture perceptions from the "average," shared cultural value.

round 1, respondents assigned points in order to reflect the existing organizational culture of their organization, while in round 2, they assigned points to the same questions, but regarding the culture they would prefer. In that way, not just the current culture was assessed but also the insight into the preferred organizational culture was illustrated. Additionally, potential organizational change does not depend only on preferences of existing employees but also on the opinion of generations to come. OCAI was used also to test the preferences of the civil

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During the final phase of the case study presented in this chapter, methods testing the relationship of culture and competitiveness were used. Given the type of data collected, these methods were more quantitative than previously mentioned methods. In order to measure national competitiveness, the World Economic Forum has constructed the Global Competitiveness Index (GCI). GCI provides a weighted average of 114 indicators, grouped into 12 pillars of competitiveness, each of which reflects one aspect of the complex concept of competitiveness [9]. Therefore, the investigation [24] was conducted on a sample comprising participants of 64 countries, using GCI as correlation and ordinary least squares regression variables, to determine the relationship between national competitiveness, cultural dimensions and economic development. GCI scores reflecting the national competitiveness, were dependent variables, while Hofstede's culture dimensions [18] were adopted as independent variables and GDP

per capita, indicating that economic development was treated as a control variable.

During the study of organizational culture of the Croatian construction industry [21, 22], OCAI was distributed to all construction companies registered in the Croatian Chamber of Economy. The respondents from construction companies were positioned as operative management level employees or higher, who could influence the organizational culture, at least within their own team and scope of work. In total, 108 valid responses were obtained from construction companies all over Croatia. Descriptive statistics of the sample is presented in

It is interesting that the study [21, 22] results identified hierarchy as the dominant culture type of the sample. This means that construction companies in Croatia are mostly highly formalized and structured organizations. People are kept together by well-defined procedures and leaders are primarily good coordinators and organizers. Success depends on predictability and efficiency. In such organizations, people accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat [25]. Average values of the current organizational

Data regarding the culture types that are present in the Croatian construction industry were additionally tested using the Welch's version of t-test from the software package Statistica 12 [21, 22]. At the significance level 0.05, the test suggested that although dominant culture

**3. Culture profile of the Croatian construction industry**

culture types in Croatian construction companies are presented in **Table 2**.

engineering students [23].

**Table 1**.

Speaking of OCAI itself, it identifies fundamental cultural aspects of the organization through six key dimensions [19]: the dominant characteristics, the leadership style, the organizational glue, the strategic emphasis, the criteria of success and the management of employees.

Each of the six key dimensions encompassed by OCAI has four alternative statements, representing the abovementioned different culture types. The study of organizational culture has been carried out by filling in the OCAI questionnaire, during which the respondents rated their organizations' culture by dividing 100 points among those four alternatives in each dimension, depending on the extent to which each alternative was similar to their own organization. A higher number of points should have been assigned to the alternative that was the most similar to their organization. Finally, individual scores have been used as an indication of the consensual view of the organizational culture of the group tested.

For the purpose of researching organizational culture of the Croatian construction industry [21, 22], a two-round modified OCAI anonymous and online survey has been conducted: in

**Figure 1.** Competing values framework [17].

round 1, respondents assigned points in order to reflect the existing organizational culture of their organization, while in round 2, they assigned points to the same questions, but regarding the culture they would prefer. In that way, not just the current culture was assessed but also the insight into the preferred organizational culture was illustrated. Additionally, potential organizational change does not depend only on preferences of existing employees but also on the opinion of generations to come. OCAI was used also to test the preferences of the civil engineering students [23].

During the final phase of the case study presented in this chapter, methods testing the relationship of culture and competitiveness were used. Given the type of data collected, these methods were more quantitative than previously mentioned methods. In order to measure national competitiveness, the World Economic Forum has constructed the Global Competitiveness Index (GCI). GCI provides a weighted average of 114 indicators, grouped into 12 pillars of competitiveness, each of which reflects one aspect of the complex concept of competitiveness [9]. Therefore, the investigation [24] was conducted on a sample comprising participants of 64 countries, using GCI as correlation and ordinary least squares regression variables, to determine the relationship between national competitiveness, cultural dimensions and economic development. GCI scores reflecting the national competitiveness, were dependent variables, while Hofstede's culture dimensions [18] were adopted as independent variables and GDP per capita, indicating that economic development was treated as a control variable.

### **3. Culture profile of the Croatian construction industry**

Such a dispersion of basic values results in four quadrants, each representing a distinct type of organizational culture: the clan, the hierarchy, the adhocracy and the market. Basic characteristics of specific culture types are also visible in **Figure 1**. Although different, it is important to emphasize that none of these types is dominant over the others, only some types can be more appropriate in a certain context [19]. However, recent research [20] shows that whichever culture type might be dominant, it exerts a positive influence on both internal (innovation competence and human relations) and external (profitability, growth and reputational assets) performance only if it is balanced, that is if there are no significant deviations of individual

Speaking of OCAI itself, it identifies fundamental cultural aspects of the organization through six key dimensions [19]: the dominant characteristics, the leadership style, the organizational glue, the strategic emphasis, the criteria of success and the management of employees.

Each of the six key dimensions encompassed by OCAI has four alternative statements, representing the abovementioned different culture types. The study of organizational culture has been carried out by filling in the OCAI questionnaire, during which the respondents rated their organizations' culture by dividing 100 points among those four alternatives in each dimension, depending on the extent to which each alternative was similar to their own organization. A higher number of points should have been assigned to the alternative that was the most similar to their organization. Finally, individual scores have been used as an indication

For the purpose of researching organizational culture of the Croatian construction industry [21, 22], a two-round modified OCAI anonymous and online survey has been conducted: in

culture perceptions from the "average," shared cultural value.

88 Organizational Culture

of the consensual view of the organizational culture of the group tested.

**Figure 1.** Competing values framework [17].

During the study of organizational culture of the Croatian construction industry [21, 22], OCAI was distributed to all construction companies registered in the Croatian Chamber of Economy. The respondents from construction companies were positioned as operative management level employees or higher, who could influence the organizational culture, at least within their own team and scope of work. In total, 108 valid responses were obtained from construction companies all over Croatia. Descriptive statistics of the sample is presented in **Table 1**.

It is interesting that the study [21, 22] results identified hierarchy as the dominant culture type of the sample. This means that construction companies in Croatia are mostly highly formalized and structured organizations. People are kept together by well-defined procedures and leaders are primarily good coordinators and organizers. Success depends on predictability and efficiency. In such organizations, people accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat [25]. Average values of the current organizational culture types in Croatian construction companies are presented in **Table 2**.

Data regarding the culture types that are present in the Croatian construction industry were additionally tested using the Welch's version of t-test from the software package Statistica 12 [21, 22]. At the significance level 0.05, the test suggested that although dominant culture


had a negative impact on organizational learning and therefore was considered as a barrier to innovation [26]. Another study [27] confirmed that there was no doubt that the innovation behavior was a key of the sustainable competitiveness. In fact, organizational culture stands out as the common element in implementing the innovation and development of competitive advantage, especially in organizations exposed to dynamic changes, seeking to adjust and to

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In addition, test confirmed that adhocracy culture was never a dominant culture type of the Croatian construction industry. That is amiss because an empirical investigation on effects of organizational culture showed that adhocracy culture has a positive effect on organizational learning, resulting in positive effects on technological and administrative innovation [26]. There are even some intra-profession studies [29, 30] verifying that lack of adhocracy characteristics harms the innovative behavior of construction companies, thus having a negative impact on their competitiveness and performance. Literally, innovativeness is the most important factor of all different cultural factors affecting the construction companies' performance [23]. Acknowledging all those findings, decision makers in Croatia should probably also consider the results [31] suggesting that government support could moderate adhocracy

Understanding the organizational culture in construction industry provides an opportunity to apply effective management practices that will improve performance and thus increase the level of both business level and national competitiveness. For the same reason, it is necessary to deepen the knowledge regarding the culture profile. Hereinafter, culture differences related to firm's core business, size, ownership and regional orientation shall be also pre-

Construction industry consists of several different stakeholders, working together on mutual projects with common goals. There are some evidence-based studies [32–34] about particular participants of the construction industry that have different objectives and different organizational cultures, which causes the conflicts among them while trying to accomplish the mutual project goals, thus being one of the principal causes of poor performance in construction projects. These findings reveal a motive for studying organizational culture differences regarding

The study [22] revealed differences among Croatian construction companies too. The absolutely dominant culture type of consultants and supervisors, as expected, is hierarchy. Tested consultants and supervisors mostly come from the faculties of civil engineering and other

ensure their permanence in the market [28].

**Culture type Mean score** Clan 26.05 Adhocracy 18.50 Market 26.49 Hierarchy 28.96

**Table 2.** Current organizational culture in Croatian construction companies [21].

culture and its relationship with sustainable construction.

the specific core business of construction companies [22].

sented and discussed.

**Table 1.** Croatian construction industry sample's characteristics [22].

type of the sample is hierarchy, none of the culture types has an absolute domination over the population. However, such a major dominance of hierarchy culture type is bad for the overall competitiveness of construction industry. A recent study confirmed hierarchy culture


**Table 2.** Current organizational culture in Croatian construction companies [21].

had a negative impact on organizational learning and therefore was considered as a barrier to innovation [26]. Another study [27] confirmed that there was no doubt that the innovation behavior was a key of the sustainable competitiveness. In fact, organizational culture stands out as the common element in implementing the innovation and development of competitive advantage, especially in organizations exposed to dynamic changes, seeking to adjust and to ensure their permanence in the market [28].

In addition, test confirmed that adhocracy culture was never a dominant culture type of the Croatian construction industry. That is amiss because an empirical investigation on effects of organizational culture showed that adhocracy culture has a positive effect on organizational learning, resulting in positive effects on technological and administrative innovation [26]. There are even some intra-profession studies [29, 30] verifying that lack of adhocracy characteristics harms the innovative behavior of construction companies, thus having a negative impact on their competitiveness and performance. Literally, innovativeness is the most important factor of all different cultural factors affecting the construction companies' performance [23]. Acknowledging all those findings, decision makers in Croatia should probably also consider the results [31] suggesting that government support could moderate adhocracy culture and its relationship with sustainable construction.

Understanding the organizational culture in construction industry provides an opportunity to apply effective management practices that will improve performance and thus increase the level of both business level and national competitiveness. For the same reason, it is necessary to deepen the knowledge regarding the culture profile. Hereinafter, culture differences related to firm's core business, size, ownership and regional orientation shall be also presented and discussed.

Construction industry consists of several different stakeholders, working together on mutual projects with common goals. There are some evidence-based studies [32–34] about particular participants of the construction industry that have different objectives and different organizational cultures, which causes the conflicts among them while trying to accomplish the mutual project goals, thus being one of the principal causes of poor performance in construction projects. These findings reveal a motive for studying organizational culture differences regarding the specific core business of construction companies [22].

The study [22] revealed differences among Croatian construction companies too. The absolutely dominant culture type of consultants and supervisors, as expected, is hierarchy. Tested consultants and supervisors mostly come from the faculties of civil engineering and other

type of the sample is hierarchy, none of the culture types has an absolute domination over the population. However, such a major dominance of hierarchy culture type is bad for the overall competitiveness of construction industry. A recent study confirmed hierarchy culture

**Characteristic of the respondent Frequency Ratio (%)**

71 37

19 89

10 98 65.74 34.26

12.04 41.67 27.78 18.52

14.81 26.85 38.89 5.56 13.89

32.41 15.74 7.41 12.96 31.48

45.37 16.67 15.74 21.30 0.93

17.59 82.41

9.26 90.74

*Gender* Male Female

90 Organizational Culture

*Age* <30 30–40 40–50 50>

*Size of the company* <10 employees 10–49 employees 50–249 employees 250–499 employees >499 employees

*Type of the company*

Supervision Consulting Design

Eastern Croatia

Dubrovnik region

*Ownership of the company*

*Ownership of the company*

**Table 1.** Croatian construction industry sample's characteristics [22].

Dalmatia

Public Private

Foreign Domestic

Civil engineering contractors Building construction contractors

*Location of the company's head office*

Zagreb, central and north Croatia Istria, Kvarner and Primorje

companies under public ownership, and later results showed that the hierarchy is a typical culture profile of public companies. Furthermore, civil engineering contractors show the mixture of the market and the hierarchy culture profiles, while building construction contractors and designers function as predominantly clan type organizational cultures. Therefore, although the Croatian construction industry's sample proved to be primarily hierarchy type, as stated earlier, testing different subcategories of subjects additionally confirmed that none of the culture types has an absolute dominance over the overall industry.

**4. Expected culture in Croatian construction industry as a direction** 

Up to now, presented arguments qualify organizational culture as an important issue that should be carefully managed in order to increase the probability of achieving better results and competitive advantage at all levels. Additionally, it should be appreciated that organizational culture is a phenomenon built and adjusted over a longer period of time. Usually, organizational culture is initially determined by the founder of the company. However, as every organization is actually a dynamic entity existing in a changing environment, the task of management is to continuously develop and adapt the organizational culture to ensure its adequacy to elements of internal and external business environment [19]. If trend is acknowledged as the development tendency of a phenomenon [36], one could conclude that it is important to consider trends while analyzing organizational culture. This means that appreciating the culture identified as preferred for the future is an important aspect of managing

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During the course of the study presented in this chapter, future organizational culture of the Croatian construction industry was tested both from the aspect of existing engineers and the

Parts of the research [21, 22] testing the preferences of the existing engineers identified a discrepancy between the current and preferred type of organizational culture in Croatian con-

Obviously, predominant preferred culture type is clan, which could lead to construction companies becoming a friendly place to work in, actively encouraging loyalty and collaboration in the workplace. In organizations like that, managers act as mentors and success is a result of a high commitment. Additionally, Welch's t-test showed that, at the significance level 0.05, clan is the dominant preferred culture type of the whole population. Therefore, propensity toward team work and family-type organizations turns to be a prevalent way of thinking in

The mutual relation of current and preferred organizational culture in the Croatian construction industry can be presented as in **Figure 2**, with dotted line showing the preferred culture

Preferred organizational culture was determined also for the relevant subcategories of the construction industry [22]. As expected, after identifying clan as being an absolutely dominant culture type wanted in future, almost all the tested subcategories expressed their preferences toward it. Only a couple of subjects would prefer hierarchy as the culture type wanted

**of potential organizational change**

aspect of civil engineering students.

the overall construction industry in Croatia.

• foreign construction companies in Croatia

in the future: • supervisors,

the organizational change and adapting to the environment.

struction companies. These results are presented in **Table 3**.

and the full line showing the actual, current organizational culture.

• large and extra-large companies with more than 250 employees,

Such conclusions are in accordance with the study of the UK construction industry [32], which interpreted hierarchy culture as appropriate for civil engineering contractors, who are usually formal organizations in which control and coordination are achieved by using formal methods and procedures. On the other hand, the study marked designers as informal organizations in which control and coordination are achieved through empathy between organizational members and through direct personal contact, typical for the clan culture. Other studies revealed similar results as well. For example, market culture presence in contracting rather than in designing companies was indicated as compliant with the dynamic nature and competitive environment of site management [33, 35].

Another distinction [22], worth of exploring, was organization's size. The size of the companies was measured by the number of employees, as illustrated in **Table 2**. It was detected that small companies with up to 49 employees, and especially the micro-companies with up to 9 employees, feel that they function within the clan type of the organizational culture. But, it seems that once a company reaches a certain size, hierarchy makes everyday business both more efficient and comfortable. Therefore, organizational culture type recorded as the current in medium sized and large organizations is hierarchy. Hierarchy tendency growing in line with the company size has been reported by other scholars too [17].

Differences regarding organizational culture depending on the ownership of analyzed organizations were investigated in terms of public and private ownership as well as in terms of domestic and foreign ownership [22].

Current differences concerning the identified mixture of the clan and market type organizational culture in private companies and absolutely dominant hierarchy type organizational culture in public companies, could be overcome if managers in both subcategories would acknowledge their influence on communication and performance and try to manage longterm organizational change toward the desirable culture type, which will be presented later in the chapter.

As for the differences regarding predominantly domestic or foreign ownership of organizations in the Croatian construction industry, hierarchy appears to be the dominant culture type in both subcategories.

Finally, analysis based on geographical differences [22] was conducted as well. The very south and the very north of the Adriatic coast (Dubrovnik region as well as Istria, Kvarner and Primorje) show the current domination of the clan culture type, while construction companies in other parts of Croatia currently function within the hierarchy culture. Hopefully, physical distance of these regions reduces the risk of conflicts among belonging companies.
